An entertainment, lifestyle, services and shopping platform. This is the way the garlicowner of shopping malls like Eldorado, Villa-Lobos e Leblonintroduces himself. But it also seems to be a good way to define how the sector, which generates R$125 billion in Brazil, has transformed over the last four years. And it helps to explain the fact that, even with the growth of e-commerce, Brazilians continue to frequent stores in shopping malls.
“Leisure and convenience have become the main function of the mall. The purchase is a consequence”, explains Rafael SalesCEO of Allos, a company that manages 50 projects across the country and is now the largest in the sector in all of Latin America. But that’s not all. The store mix is also changing – a lot. Want an example? Electronics stores, which already accounted for 15% of total sales in Allos shopping malls, are much smaller. And what has happened to the anchor stores, those giants that were announced whenever a new shopping mall began to be built?
Large appliance, home goods or variety stores are giving way to smaller stores. In part, this happened almost compulsorily: large retailers shrank during this period. Sales avoids mentioning names, but it is known that retailers with a strong presence in shopping malls, such as Americans e Casas Bahiahave closed several stores in the last two years.
The figure of the “anchor store” – the one that is usually located in a prime location, and which ends up guaranteeing greater traffic for the shopping center – is, therefore, losing space. A recent case, says Sales, happened in Belo Horizonte. A large electronics store in Boulevard Shopping gave way to six other establishments. And, in this renegotiation, the total rent that Allos will receive will be 50% bigger than if the space were dedicated to a single company.
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“What is growing is the consumption of goods of lower individual value, which does not depend on credit. Products that require heavier financing sell less,” says Sales.
With this transformation, electronics stores now represent around 6% of total sales in Allos shopping malls – compared to that share of around 15% a few years ago. In addition to the effect of interest, which makes installment sales more expensive, e-commerce has gained ground in this segment. Keeping large – and expensive – stores in shopping malls does not seem like a good deal. “Operations no longer need areas as large as in the past,” he says.
In this exchange, retail stores clothes and cosmetics have been gaining presence, along with the restaurants and the servicesespecially aimed at aesthetics. Just as anchor stores did in the past, this type of service attracts customers, explains Sales. And thus contributes to increasing the revenue of the enterprises.
One shopping mall, several audiences
Allos – the result of the union of BR Malls and Alliansce Sonae – has expanded its strategy of serving audiences with different economic profiles in the same enterprise outside of São Paulo. The idea is to create clusters that bring together more sophisticated or more popular stores. A classic example of where this type of organization already works is the Eldorado shopping mall, in São Paulo. There, there is a large food court, with several brands of fast food. But there is also a reserved area with restaurants for a more demanding public.
This concept, which also works for stores, is being replicated in the North and Central-West regions of the country, which are directly benefiting from the growth in wealth coming from agribusiness. And also the minimum income programs – which end up irrigating the local economy. They are different audiences and, therefore, it is essential to offer the “right product” for each consumer, says Sales.
“The art is to have data, technology resources, that allow us to understand who the consumer we are serving is, and which brands fit into the projects”, he says.
The challenge, in this case, is to attract high-end national or even international brands to cities further away from the Rio-São Paulo axis. A successful case was the opening of French stores Sephoracosmetics, in shopping malls in Belém, Cuiabá and Uberlândia. “We do curation work, showing our partners some markets they don’t know about,” he says.
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Expanding
Allos is the result of the integration of two competitors – Aliansce Sonae e a BR Malls –, in an operation completed in 2023. From this marriage, the largest company in the shopping mall sector in Latin America emerged: there are 50 own projects in Brazil. The company’s net revenue in 2023 was R$2.7 billion, 10.1% above the previous year. Of this total, 25% comes from shopping malls in São Paulo, 25% from Rio and the rest is spread across the country.
Contrary to predictions that were made at the height of the pandemic, the movement in the more than 15 thousand stores housed by these projects is growing: in the third quarter, total sales in Allos shopping malls increased by 8% compared to the same period in 2023. And sales per square meter, which is a mall productivity metric, increased 9%.
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Allos’ plans for 2025 include expanding the areas of some shopping malls, including Villa-Lobos, in São Paulo, Dom Pedro, in Campinas (SP) and Leblon, in Rio. But acquisitions also remain on the radar. “We really value this alternative,” he says.
This year, the news about M&A in the shopping mall sector became heated. The Canadian Brookfield put up for sale its stake in the Pátio Higienópolis and Pátio Paulista shopping malls, 50.1% and 55.9%, respectively. Allos is not in the running to acquire the stakes. Iguatemi signed an exclusive contract to negotiate the purchase of the assets. According to sources interviewed by InvestNewsthe offer was R$1.4 billion for the Paulista stake and R$1.2 billion for Higienópolis.
Although it is preparing expansions and is not ruling out new acquisitions, Allos has also been making divestments. This year, there were two transactions: a minority position package in three shopping malls (20% of Carioca Shopping, 10% of Shopping Tijuca, both in Rio, in addition to 9.9% of Plaza Sul Shopping, in São Paulo) and 50% of the Rio Anil shopping mall, in São Luís (MA).
These operations help to make up Allos’ cash generation, of around R$2 billion per year. A portion of these resources is used to pay for assumed financing, and the remainder is reinvested. With the weaker stock market, the company also allocated around R$800 million of these resources to repurchase part of its shares. “The fact that we have a high level of cash and are able to sell assets at a valution better than the price at which our shares are traded opens up an opportunity for repurchase”, he explains.
Macro risk
Although the mall business is doing well, Sales is one of the executives who echo the criticism of fiscal policy. “The government is not giving a clear vision about the prioritization of public resources. And if public spending is not efficient, it will generate inflation”, he says. “I’m in favor of the minimum income program, but we can’t have such a burdensome state.”
Another point of attention for shopping malls at this time is the debate about the end of the 6×1 work schedule. In Sales’ view, if Congresswoman Erika Hilton’s (PSOL-SP) proposal to reduce working hours is approved, there will be “inflation in the veins”. “It is a proposal that goes against what is happening in the rest of the world”, he says. “Brazil is far from being Denmark.”
